You’ve probably seen the headlines. There are currently record numbers of borrowers switching their mortgages to new lenders.

In fact, in June, over 3500 borrowers switched a total of $2.475 billion in mortgage debt to new lenders. This is a record high since the Reserve Bank began tracking this data in 2017.

Switching has become so popular that it makes up 30% of all new mortgage lending.

But why the sudden surge?

Why is everyone so keen to switch banks at this moment, and is it something you should be considering for your own mortgage?

Let’s find out now!

Why Are People Switching Banks Right Now?

There are several factors that are currently making switching lenders more appealing right now:

• Attractive cash-back offers: Many banks are offering cashback incentives to switch, as much as 8% to 1% of the loan’s value. This can create tens of thousands of dollars in your hand for larger mortgages.
• Shorter fixed rates: A large portion of borrowers are currently on floating or shorter-term fixed rates, meaning they can switch without incurring significant break fees. Nearly 14% of borrowers are floating and another 39% are due to roll off their fixed terms by the enf og the year. This enables easy switching.
• Frustration with current lenders: Some people are becoming increasingly unhappy with the service their current lender is providing and are making the change in the hope of seeing an improvement in service.

Is The Current Property Market Encouraging Switching?

The current state of the property market is certainly playing a role in people’s borrowing decisions. House prices are quite stagnant at the moment. Values are not really increasing, or if they are, the increase is quite negligible. This is keeping the property market in its stalled state – people are cautious about buying or selling.

As borrowers are not currently focused on market gains, they have the flexibility to explore where they can get rate savings or better offers. It is resulting in switching and refinancing purely for immediate financial benefits, rather than locking something in for future growth.

Should You Consider Switching Banks?

How do you know if switching banks could be a good idea for you? Asking yourself these questions is a good place to start:

1. Are you currently on a short fixed term or floating rate? If you are, you can likely switch without incurring hefty break fees.
2. Is your bank offering a poor interest rate or limited features? Banks are currently competing for your business! You may be able to secure better rates or a cash-back incentive with another provider.
3. Are you unhappy with your bank’s service? Service not up to scratch? You might get better treatment with a different lender.
4. Have you reviewed your mortgage recently? Rates and terms change. A mortgage advisor can help assess if you have the best deal for your current circumstances.

Why Mortgage Advisors Are Crucial When Switching

Switching your mortgage from one lender to another is a little more complicated than simply changing your internet banking login! You need to consider paperwork, valuations, loan terms and timing. That’s why it is crucial to have a financial expert like a mortgage advisor helping you through the process.

They can help you:

• Compare all available options – including rates, mortgage structures and cash back offers. Looking at everything holistically will highlight the best complete offer for you.
• Calculate true savings – there are some costs involved with switching banks, a mortgage advisor can help you understand if break fees, legal costs, and new valuation charges apply, along with the impact of long-term rate differences.
• Handle the paperwork – there will be negotiations and transitions to navigate, as well as paperwork to prepare and sign. A mortgage advisor demystifies all of that, making the experience seamless and stress-free.
• With ongoing support – your mortgage advisor will check in with you periodically to ensure you are still on the best deal after switching banks.

Thinking About Switching?

If you are considering whether switching banks is the right option for you, then we’d love to help you decide. Here at Mortgage Suite, we help you by:

• Providing clear, personalised comparisons across all lenders, including cash-back, interest rates, and loan features.
• Assisting with understanding the bigger picture, not just immediate cash rewards.
• Using our skill and experience to manage the switch from start to finish, including recommendations on valuations, lending and legal coordination.
• Prioritising excellent service. Our clients often comment on our responsiveness and attention to detail, exactly what they are missing from big banks!

Want to explore whether switching makes sense for you? Then get in touch now! Our team will guide you through the process and help you make the smartest choice for your mortgage.